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How Bill Gross became too hot for Pimco to handle

Written By Unknown on Sabtu, 27 September 2014 | 23.24

Bill Gross' abrupt departure from Pimco, the giant bond firm that he co-founded more than four decades ago, was preceded by months of clashes between the star investor and the firm's executive committee that got progressively worse, according to sources familiar with the situation.

Tensions had been building within Pimco, the Newport Beach, California-based asset manager with about USD 2 trillion under management. Co-Chief Investment Officer Mohamed El-Erian, Gross's long-time heir-apparent, made an acrimonious exit in January. The flagship Total Return Fund, the world's largest bond fund, suffered 16 straight months of outflows. The wrangling and the underperformance grated on the executive committee, chaired by Chief Executive Douglas Hodge.

"While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," Hodge said in a statement on Friday.

As Gross, known as the "Bond King" within the industry, butted heads with colleagues, the clashes got worse. In recent days, about five senior portfolio managers told the executive committee that they would quit if Gross stayed, the sources said.

Gross himself threatened repeatedly to quit, letting management know that he had been looking around for a role elsewhere. Jeffrey Gundlach of DoubleLine Capital, Gross' arch-rival and the closest contender for the Bond King crown, said in an interview on Friday that Gross approached him early last week about a possible role.

They met last week at Gundlach's house in Los Angeles. The two discussed the possibility of Gross joining DoubleLine, but Gundlach said he wasn't willing to share direction of the firm with Gross.

"He didn't seem that rattled. But he didn't seem happy. He seemed a bit angry about what was going on," Gundlach said.

In recent days, when Gross again threatened to quit, the executive committee decided it was time he actually left the firm, one of the sources said.

The firm had already put a succession plan in place, choosing Deputy Chief Investment Officer Dan Ivascyn as the successor. Allianz SE, the firm's German parent, had given its blessing. An announcement of Gross' ouster had been prepared, and was set to be announced as soon as Saturday, the source said.

Then, Gross sprung a surprise.

On Friday morning, Gross quit Pimco to join asset manager Janus Capital Group, run by his former Pimco colleague Richard Weil. Gross will manage the Janus Global Unconstrained Bond Fund. The fund, started in May, has just $13 million in assets. Pimco Total Return Fund has about $222 billion.

"It is the right thing," Gundlach said of Gross's move to Janus. "Now he can perform better because he isn't managing a lot of money."

Gundlach said Gross left him a voice mail on Thursday evening, saying he was leaving Pimco to join another firm.

Gross didn't respond to requests for comment.

GROSS WALKS AWAY

Gross' abrupt departure climaxes a drama that has riveted industry executives, investors and rivals over the past year. It raises questions about the future performance of the firm, which counts tens of thousands of ordinary Americans and major institutions including the CalPERS pension fund as investors in its mutual funds , exchange-traded funds and other products.

U.S. Treasuries prices fell on Friday, Allianz slipped more than 6 percent in German trading and Janus soared 43 percent.

"I think people are concerned that Pimco is going to have to liquidate, so there is some pre-selling going on ahead of the fact that they may have to do some selling," said Tom di Galoma, head of rates and credit trading at ED&F Man Capital Markets.

Pimco has been stressing in meetings with its investors that the company had several people who could succeed Gross and that he would be playing a smaller role in the firm's investment and management decisions in the future, said Karissa McDonough, a fixed income strategist at People's United Wealth Management in Burlington, Vermont, who met with Pimco representatives in early September.

"They were trying to reassure us by driving home the point that they're not so dependent on Bill Gross anymore," she said.

Gross walks away without severance pay. There are none of the usual contractual obligations in his departure either, the source said. There is no non-compete agreement nor a "gardening leave" cooling off period before he can start to work at Janus, the source said. He starts working at Janus on Monday.

It couldn't be learned whether Gross owns a stake in Pimco. Forbes estimates his net worth at $2.3 billion.

TROUBLE IN NEWPORT BEACH

The first signs of real trouble at Pimco came in January, when El-Erian left the firm and the acrimony spilled out into the open.

On Feb. 24, the Wall Street Journal published a report describing how El-Erian's previously close relationship with Gross had soured as the firm's investment performance deteriorated last year. Then Gross told Reuters that his one-time lieutenant was trying to "undermine" him, and that he had "evidence" El-Erian "wrote" the Journal article.

After El-Erian's exit, Pimco promoted six portfolio managers, including Ivascyn, to deputy chief investment officer roles and revamped the investment committee, positioning them as possible successors to Gross.

But the new structure failed to stem a steady exit of investors from the Total Return Fund, which until today was managed by Gross. Cash outflows began last year due to weak returns and the fund declined 1.9 percent in 2013, its worst performance in nearly two decades. El-Erian's exit exacerbated investors' unease.

Earlier this week, Pimco said the U.S. Securities and Exchange Commission is investigating whether it inflated the returns of its Total Return Exchange-Traded Fund, also managed by Gross.

The sources said the SEC investigation, which is also into how securities were allocated between the mutual fund and the ETF and has been going on for at least a year, was not the trigger for Gross' departure.

FLARE-UPS

As the problems mounted at Pimco, Gross, already known for an authoritarian management style, had flare-ups with other employees, including Hodge, several sources with first-hand knowledge of such incidents said.

At the same time, he made waves in public with unusual comments and behavior.

In April, he dedicated the first half of his widely followed Investment Outlook letter to his dead cat and headlined it "Bob". "Aside from sleeping, Bob loved nothing more than to follow me from room to room making sure I was OK," he wrote. "It got to be a little much at times, especially when entering and exiting the shower."

At an investment conference in Chicago this summer, Gross donned sunglasses inside the venue and joked he'd become "a 70-year-old version of Justin Bieber."

But there were few signs that his standing within the firm was rapidly fraying.

A few days after the Chicago event, Hodge spoke reverentially about Gross. "Through the Total Return Fund and other strategies, Bill has created more value for more investors than anyone in the history of our industry," Hodge said.

Some industry sources speculated on Friday that Gross' departure may pave the way for the return of El-Erian, who has been working part time as Allianz' chief economic adviser, to the firm.

In an interview on Monday, El-Erian declined to say whether he had any such plans.

"If you ask me for the next six months, I have absolutely nothing in addition to what I am doing," El-Erian said.


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Kingfisher secures stay against UBI's wilful defaulter tag

KFA and its erstwhile directors had filed a writ in Calcutta HC against UBI and others, challenging the constitutional validity of the RBI master circular on wilful defaulters as well as the ex-parte decision of UBI's grievance redressal committee.

Kingfisher Airlines  announced that it has secured a stay from Calcutta High Court on the decision of the grievance redressal committee of the  United Bank of India which had earlier declared the airline and its directors as wilful defaulters.

UBI has been directed to file its affidavit-in-opposition by November 3 and the petitioners have been asked to file their reply one week thereafter. The next date of hearing is November 10, 2014.

Commenting on the stay granted by the court, Prakash Mirpuri, Vice President-Corporate Communications, Kingfisher Airlines, said: "We had earlier stated that we would legally challenge the wrongful decision of United Bank of India and that we have great faith in the judiciary in our country. We will legally defend our position on all allegations going forward." 

Kingfisher Airlines along with its erstwhile directors had filed a writ petition in Calcutta High Court against UBI and others, challenging the constitutional validity of the RBI master circular on wilful defaulters as well as challenging the ex-parte decision of UBI's grievance redressal committee.

The matter was listed for hearing on Friday (September 26) before Justice Debangsu Basak. After hearing counsel for the petitioners and the bank, Justice Basak passed an order in which he held that, prima facie, the bank acted in breach of the principles of natural justice by not making over the documents referred to and relied upon by it to KFA prior to the hearing. Thus, not enabling KFA to make an effective representation against the charges/allegations made against them in relation to being declared wilful defaulters.

Kingfisher Air stock price

On September 26, 2014, Kingfisher Airlines closed at Rs 1.87, up Rs 0.06, or 3.31 percent. The 52-week high of the share was Rs 6.84 and the 52-week low was Rs 1.72.


The latest book value of the company is Rs -166.59 per share. At current value, the price-to-book value of the company was -0.01.


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Rageen Duniya! Which paint stocks to buy ahead of Diwali

SLIDESHOW

Sat, Sep 27, 2014 at 15:49

| Source: Moneycontrol.com

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.


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Buying option? A Rs 15/sh stock which may give 82% in 1 yr

The company has a market capitalisation of Rs 352.30 crore. Its FY14 sales turnover was Rs 385.86 crore with net profit of Rs 30.79 crore.

Moneycontrol Bureau

Will you buy a stock which costs only Rs 15 per share and has potential of earning over 80 percent in a year's time? Shares of  Grauer and Weil (India) have jumped 245 percent from a mere Rs 4.50 to Rs 15.24 in last 12 months. So, what is ticking the stock on buyers' radar?

East India Securities has initiated coverage on the stock with a buy rating and a bullish target of Rs 28 (around 82 percent jump), stating that its market leadership position in the surface protection business boosts it to capitalise on the improving business scenario.

The company has a market capitalisation of  Rs 352.30 crore. Its FY14 sales turnover was Rs 385.86 crore with net profit of  Rs 30.79 crore.

"Its sales and profits have grown13 percent CAGR and 17 percent CAGR during FY10-FY14 despite slowdown in the economy and is all set to generate healthy free cash flow in next couple of years with low gearing and no major capex required in next 2 to 3 years. Revenues from real estate business will also see a sharp jump as renewal of 40 percent of lease, due next year, and is likely to be at 75 percent increment," the brokerage says in a report.

Grauer and Weil has 38 percent market share in the Rs 7000 mn electroplating chemical industry. It offers surface treatment products and solutions in chemicals, equipments, paints and lubricants segments. It also has a 10 acre land in Mumbai's western suburb, which has been developed into a Mall - Growel's 101.

Promoted by Ramanlal Shah and Kanchanlal Shah, as a private limited company, Grauer & Weil (India) Ltd was converted into a public limited company in Feb 1961.

However, low cost products from Chinese market are the major concern in chemical business, says the brokerage.

On Friday, the stock closed at Rs 15.54, up Rs 1.41, or 9.98 percent on the BSE.

Stock Performance %    
Absolute (%) Sensex GWIL
3 months 6.90% 82.60%
1 year 34.50% 245.90%

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Myra Vineyards: Making wine the new beer!

Watch investment banker turned winemaker Ajay Shetty raise to entrepreneurship with his venture Myra Vineyards.

Watch investment banker turned winemaker Ajay Shetty raise to entrepreneurship with his venture Myra Vineyards.


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Vizury: Bringing brands closer to online markets

On the Big League, Young Turks catch Bangalore-based big data analytics firm Vizury that has grown 25 times in the last two years and is not too far from an IPO.

On the Big League, Young Turks catch Bangalore-based big data analytics firm Vizury that has grown 25 times in the last two years and is not too far from an IPO.


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Modi thanks people for warm reception in New York

Modi, 64, flew into New York's JFK airport yesterday on a special Air India Boeing plane on the first leg of his maiden visit to the US as Prime Minister after a nearly nine-hour flight from Frankfurt where he had an overnight halt.

Prime Minister Narendra Modi has thanked the Indian-American community for the warm welcome he received upon his arrival here as he was greeted by chants of 'Modi' 'Modi' outside his hotel.

"A big thank you for the warm welcome in New York! Deeply touched. Looking forward to a great trip ahead," Prime Minister Modi tweeted hours after his arrival.

Modi, 64, flew into New York's JFK airport yesterday on a special Air India Boeing plane on the first leg of his maiden visit to the US as Prime Minister after a nearly nine-hour flight from Frankfurt where he had an overnight halt.

In a rare gesture, Prime Minister Modi came out of his huge convoy to greet a large number of Indians who had gathered outside his hotel to welcome him on his arrival to the US and were chanting his name.

As a large convoy of vehicles came to the hotel he would be staying in till September 29 before moving to Washington, Modi came out and greeted people who had gathered their in a special enclosure made by the local administration.

Modi greeted everyone with a namaste and also waved at the people, while walking across them outside the barricade of the enclosure. He then walked inside the hotel.

Modi also shook hands with a few people who had gathered there and walked almost an entire block distance before going back to the hotel. Many people were seen taking pictures and videos of him.

The crowd had gathered for over two hours to greet him. A stampede-like situation erupted as people pushed each other to see Modi.

People were heard talking about him and his gesture for a long time.


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PM Modi 'ring fenced' against summons

Even the White House downplayed the issue, with its Press Secretary Josh Earnest saying that it (lawsuit) was not going to have any impact on Prime Minister Modi's very important visit .

India made it very clear that Prime Minister Narendra Modi, who arrived to the US on a five-day visit, was "ring fenced" and there was no question of anyone serving any summons on him and that an action in the matter was underway. India's strong reaction came a day after a federal US court issued summons against Modi on his alleged role in 2002 communal violence in Gujarat when he was the state chief minister.

Even the White House downplayed the issue, with its Press Secretary Josh Earnest saying that it (lawsuit) was not going to have any impact on Prime Minister Modi's very important visit and added that sitting heads of government also enjoy personal inviolability while in the US, which means they cannot be personally handed or delivered papers to begin the process of a lawsuit. Asked about the summons, External Affairs Ministry spokesperson Syed Akbaruddin said, "Indian representative is ring fenced. There is no question of anyone serving any summons on India's sovereign representative. Lets make it very clear, there will be no such issues. State Department has also clarified."

He said the government will handle the process in accordance with the procedure and an action was underway on that. The summons against Modi were issued by US Federal Court for the Southern District of New York following a lawsuit filed by the New York-based American Justice Center (AJC), a non-profit human rights organization, along with two "unnamed" survivors of the 2002 Gujarat violence.

Earlier, the spokesperson had termed the case as a "frivolous and malicious attempt to distract attention from the visit of the Prime Minister to the United Nations General Assembly and a bilateral summit with the president of the United States. "The Indian-American community in the US is also eagerly looking forward to the Prime Minister's visit and has prepared a rousing reception for him.

"The allegations in the case are baseless and similar to other such allegations made in the past against the Prime Minister. A Supreme Court of India-monitored investigation has comprehensively examined and dismissed these allegations as baseless," he said. "It is unfortunate that vested interests are raking up the matter only to vitiate the atmosphere during the visit. Appropriate steps are being taken to address the matter," he added.


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Kyoorius Design Yatra focuses on communications business

This week, Storyboard Kyoorius Design Yatra has lined up two interviews that shed light on where the communications business is headed. First is Mat Heinl from British agency Moving Brands. Another is, Natasha Jen, Partner at Pentagram. explains their agency's culture and how they help marketers.

This week, Storyboard Kyoorius Design Yatra has lined up two interviews that shed light on where the communications business is headed. First is Mat Heinl from British agency Moving Brands. Another is, Natasha Jen, Partner at Pentagram. They explain their agency's culture and how they help marketers.


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Indians, Americans see each other in positive light: Survey

In India, a majority of the public (55 percent) has a favourable view of the US, including 30 per cent with a very positive outlook, according to the survey. Only 16 percent see the US unfavourably, while 29 percent offer no opinion.

Prime Minister Narendra Modi's visit to the US comes at a time when people of both countries continue to see each other in a largely positive light, according to a Pew Reasearch Centre survey. While Madison Square Garden's sold-out shows usually include headliners like Bruce Springsteen, Madonna or Arcade Fire, tomorrow's reception for Modi is expected to draw an equally massive crowd of nearly 20,000 Indian-Americans, it said.

Modi's appearance at the midtown Manhattan entertainment venue is part of his first trip to the US as leader of the world's largest democracy and comes at a time when people of both countries continue to see each other in a largely positive light, the survey said. In India, a majority of the public (55 percent) has a favourable view of the US, including 30 per cent with a very positive outlook, according to the survey. Only 16 percent see the US unfavourably, while 29 percent offer no opinion. These high ratings are essentially unchanged from late last year, when 56 of the Indian public gave the US positive marks. Americans return the positive feelings, with a majority (55 percent) expressing a favourable assessment of India.

This shows little change compared with the last time Americans were asked to rate India in 2009, when 56% saw the emerging Asian power favourably. As with Indians' views of the US, Americans' regard for India differs by gender, income and education. Men (60 percent) and those who are better educated (59 percent) are more likely than women (51 percent) and those with less education (50 percent) to have a favourable view of
India.

Higher income Americans (63 per cent) also see India more positively, though about half with lower incomes (51 per cent) share this sentiment. The support that Indians and Americans voice for one another may reflect the ever-increasing importance of the Indian diaspora in the US and its involvement in American politics. The Indian-American population now totals over 3 million people, most of whom are highly educated and earn above the median US household income, according to a 2012 Pew Research Centre report on the growing number of Asian Americans. Nearly nine-in-ten adult Indian Americans report being foreign-born, and roughly seven-in-ten (69 percent) have close family still in India. Of those with family remaining in India, about half (49 percent) still send money back on a regular basis.


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Nifty to consolidate around 8000; buy cyclicals: Dalton Cap

Written By Unknown on Sabtu, 20 September 2014 | 23.24

UR Bhat, MD, Dalton Capital Advisors believes the market currently seems to be consolidating at around 8000 levels. The next move for the market is only likely after the credit policy on September 30 and the half yearly results.

According to him with lack of positive triggers, it would be difficult for the Nifty to breach 8250 level and would be rangebound between 7,850 and 8,250, given the macro situation and unlikely rate cut.

With regards to sectors that could out perform going forward, he thinks cyclicals would continue to be the favourites especially with renewed hopes of an economic revival, policy momentum and so advices buying them on dips.

Stocks like Larsen & Toubro ( L&T ) and Oil and Natural Gas Corporation ( ONGC ) both look interesting on back of economic revival and positive policy outcome.

If one is talking about growth momentum picking up then one should look at sectors like cement, engineering, EPC because these are spaces where one is sure to find value, feels Bhat.

Meanwhile, small investors should look at investing in blue-chip companies for reasonably good returns, says Bhat.

According to him midcaps like Arvind , Ashok Leyland , Voltas ,  Crompton Greaves are likely to consolidate post their re-rating. However, FMCG is unlikely to participate in the next run for the market, feels Bhat.

On the larger scale, Maharashtra assembly election results could have only a one day impact on market and not more believes Bhat.

Also read: Nifty upmove to continue; resistance at 8130-8140: IIFL

Below is the transcript of UR Bhat's interview with Sonia Shenoy & Anuj Singhal on CNBC-TV18

Sonia: It was a very interesting week because we had that blow out performance on Thursday but then over all for the week we ended flat. What's the sense that you are getting about why the market saw that big move and also what the way forward could be?

A: Thursday figures suggested that there was no big buying by either FII's or domestic institutions. It was purely a tactically rebound largely because the market participants, quite a lot of them had gone short on the US Fed decision. With the US Fed decision being what it was they were forced to cover, that must be the real explanation for what happened on Thursday.

Otherwise the market is consolidating reasonably well. Even the correction has not been very steep. At around 8000 level it's consolidating very well. The next move if anything will be probably after the credit policy and after the half yearly results.

Anuj: This week we did see a bit of shift to defensives. IT did well; Tata Consultancy Services ( TCS ) in fact hit a market cap of almost USD 90 billion. Do you get a sense that IT, pharma and FMCG might drive the market from hereon and cyclicals might take a bit of a back seat?

A: Well the sector rotation keeps happening but I am not very sure whether FMCG will participate in a very big way in next run if there is one. But cyclicals are all over the favourites at least given the macro set up that we have. If there is going to be an economic revival, if there is going to be a policy momentum coming out of Delhi, cyclicals are one that should do well. This dip would be a reasonably good buying opportunity because nobody has still lost hope on action from Delhi. So there should be something that's coming there.

Sonia: So would you look into buying names like Larsen & Toubro (L&T) which fell about 2-3 percent this week or would you look at the big gainers of the year which has been the oil and gas names like ONGC etc?

A: Both of them look interesting however, if there is going to be a revival in the economy, stocks like Larsen and Toubro (L&T) should certainly do very well. But the Oil and Natural Gas Corporation (ONGC) types are sort of policy dependent. Therefore we should see what is going to happen on the subsidy regime, what is going to happen about the gas price regime. It's all contingent of that and there is lot of hope that things will happen there. However, that space needs to be very closely watched as far as policy initiatives are concerned.

Anuj: What about some of these midcap names, the likes of Arvind, Ashok Leyland, Voltas and Crompton Greaves which are sort of being re-rated this year from their lower levels. Do you get a sense that they will see some profit booking now because valuations have run up or would the flow of money keep supporting these stocks even at higher levels?

A: The flow of money will keep supporting these, not that they should go dramatically higher from here because there is lot of hope that is resting on these scripts at current prices. So unless there is some sort of a momentum on the policy front in terms of new investment proposals taking shape, maybe they will sort of consolidate at these levels or if there is disappointment and nothing happens for the next six months then there would be a correction. But as of now the hope is still quite robust so they would probably consolidate at these levels.


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Storyboard Special: Kyoorius Design Yatra

Storyboard caught up with leading marketers at the Design Yatar to understand why their trip was worthwhile.

On this special episode, catch interviews with Gaston Legorburu, CCO, Sapient Nitro and Tim Malbon, Co-Founder, Made by Many, on the changing nature of their business. Also listen in to Ajaz Ahmed, Founder & CEO, AKQA on why digital agencies need to maintain a start up culture and AKQA's India operations. Storyboard editor Anant Rangaswami also caught up with leading marketers at the Design Yatar to understand why their trip was worthwhile.


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Overdrive: 150cc motorcycle faceoff

Overdrive pit four of the latest 150cc segment commuter motorcycles - Suzuki Gixxer vs Bajaj Discover 150F vs Hero Xtreme & Yamaha FZ against each other to find out which motorcycle you should spend your money on.

Overdrive pit four of the latest 150cc segment commuter motorcycles - Suzuki Gixxer vs  Bajaj Discover 150F vs  Hero Xtreme & Yamaha FZ against each other to find out which motorcycle you should spend your money on.


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ICICI Pru MF launches Multiple Yield Fund - Series 7 -1100D

ICICI Prudential Mutual Fund launches ICICI Prudential Multiple Yield Fund - Series 7 - Plan F, a close ended income fund with the objective to seek to generate returns by investing in a portfolio of fixed income securities/ debt instruments.

ICICI Prudential Mutual Fund has launched a new fund as ICICI Prudential Multiple Yield Fund - Series 7 - Plan F, a close ended income fund. The tenure of the plan is 1100 days from the date of allotment of units. 

The primary objective of the scheme is to seek to generate returns by investing in a portfolio of fixed income securities/ debt instruments. The secondary objective of the scheme is to generate long term capital appreciation by investing a portion of the scheme's assets in equity and equity related instruments. 

The new fund offer (NFO) will open for subscription from September 23, to October 07, 2014. The new fund offer price for the scheme is Rs 10 per unit. The scheme is proposed to be listed on NSE. 

The scheme offers direct and regular plan. Each plan will offer cumulative and dividend option. Dividend payout is the only facility available under dividend option. 

The minimum application amount is Rs 5000 and in multiples of Re 1 thereafter.

The entry and exit load charge are not applicable for the scheme 

The scheme will allocate 70% to 95% of assets in debt securities (including government securities) with low to medium risk profile. It would allocate upto 20% of assets in money market instruments, cash and cash equivalents with low to medium risk profile and it would allocate 5% to 30% of the asset in equity or equity related securities with medium to high risk profile. 

Of the investments in debt instruments, 82%-87% would be invested in AA rated non convertible debentures. 

The benchmark index for the scheme will be CRISIL MIP Blended Index.

 The fund managers for the scheme are Rajat Chandak equity portion, Rahul Goswami and Aditya Pagaria will jointly manage the debt portion and Abhishek Pathak for ADRs/GDRs and other foreign securities.


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Principal Mutual Fund announces change in exit load

Principal Mutual Fund has announced change in exit load of Principal Debt Opportunities Fund - Corporate Bond Plan, with effect from September 22, 2014.

Accordingly, the exit load charge will be 0.50% if redeemed on or before 60 days from the date of allotment.

If redeemed after 60 days from the date of allotment, the exit load charge will be Nil.


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Overdrive solves all your motoring queries on Auto Selector

Bertrand D'Souza of CNBC-TV18 solves all viewer queries on Auto Selector segment of Overdrive.

Bertrand D'Souza of CNBC-TV18 solves all viewer queries on Auto Selector segment of Overdrive.


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First ride: TVS Scooty Zest

Overdrive gets its hands on TVS's latest scooter for girls; TVS Scooty Zest.

Overdrive gets its hands on TVS 's latest scooter for girls; TVS Scooty Zest.


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Diplomatic talks aside, China still bypasses Indian exports

Chinese premier Xi Jinping's promise to invest USD 20 billion in India was the highlight of his most-talked-about visit to the country, but the fact remains that the dragon nation is still resisting Indian imports.

Also read: India-China talks: High on hype; low on substance?

In an interview to CNBC-TV18's Latha Venkatesh, Dr Sachin Chaturvedi, Director General, RIS says China continues to bypass India. He says China is using non tariff barriers to block Indian export of agriculture products.

He says Indian pharma exports too are not being allowed and despite USFDA's clearances to the drugs, China on pretext of standards, is not allowing exports in Beijing or Shanghai.

Also read: Key trade, biz announcements during China Xi's India visit

Professor SK Mohanty says the issue also lies with the value chain. While India has competitive advantage in several lines of products like machinery, precision instruments, chemicals, in some sort of textiles, China continues to import from Association of Southeast Asian Nations (ASEAN) – Indonesia, Malaysia, Philippines, Singapore Thailand, Brunei, Cambodia, Laos, Myanmar (Burma) and Vietnam.

In the process of import from ASEAN countries, China is completely bypassing India's capabilities. "China should change its strategy to source more from India where it is more competitive than other countries so that it can benefit itself by lowering its cost of imports from other ASEAN countries and also provide greater market access to India, he adds.

Below is the transcript of Sachin Chaturvedi & SK Mohanty's interview with Latha Venkatesh on CNBC-TV18.

Q: We understand that China is now moving from slightly lower value-added industries to more hi-tech industries. It is vacating some industries. Do you think this vacating can be an area which India can take over and thereby bridge the trade deficit? What are the immediate plans that you can think of to bridge this vast trade deficit?

Chaturvedi: It is very important for us to realise that almost 42 percent of our total exports to China is coming from our natural base. So that kind of extractive profile that China has exhibited in the last couple of years from across the world is a major challenge and that India would have to evolve proactive measures in terms of promoting technology intensive exports and that requires a major push.

Q: If you can elaborate a bit more since most of us are very ignorant of what exactly are the products exported. You are saying it's largely items like iron ore which are natural resources.

Chaturvedi: Exactly. If one looks at the statistics, one will find that textile is almost 26 percent of our total exports while minerals and base metals are almost 42 percent of the total exports. So China's appetite for natural products for minerals, for iron ore and other things is huge and unfortunately, India hasn't put any kind of check on this export (a) because it is very rewarding and (b) because traders are finding it very easy to ship it to China. Sometimes we know from one of these states even unauthorised exports of iron ore have happened in the past.

Q: Would you say that the export levy on iron ore which India introduced a year ago is the way to go. As well what other strategies can India employ?

Chaturvedi: That is only one dimension of the challenge that we have to face. The second one is far more intense in terms of domestic policy proposition which is to give impetus to our manufacturing sector. As you rightly mentioned in the beginning about giving push to our technology intensive exports and there is a sort of vacuum in our export portfolio at this stage. So, it has to be addressed. We need to put our thinking hats on in terms of how we create a niche for that and as one might have noticed Dr. Mohanty has come up with a study which lays out nuances of a strategy in which we make India part of the global value chains which are bringing in India and China together. So, that is the way forward and we would have to lay out a roadmap in terms of how we can hookup at least some sectors of our manufacturing area to have a balance in terms of a hook to linkup with when it comes to high technology exports.

Q: In your paper you speak of the global value chain as well as the regional value chain. How does India fit in?

Mohanty: One can see that the global trade is moving fast in the areas of regional valuation and in this regard if one looks at the competitive position of India vis-à-vis other suppliers of products related to valuation sector, then India is better-off compared to many countries in south and south east Asian region.

The study has highlighted that in the sector, value chain particularly parts and components, India has got competitiveness in several lines of products like machinery, precision instruments, chemicals, in some sort of textiles – these are the broad sectors within the region of value chain particularly parts and components where India has got competitiveness as compared to major leading countries in south east Asian counties like Singapore, Indonesia, Malaysia and Philippines.

Q: What is holding back? Is it that we are not part of an Association of South East Asian Nations (ASEAN) or any of the regional trading blocks? Is that the reason why we are not participating in this regional value chain?

Mohanty: Difficulty is that China is consistently through bilateral Free Trade Agreements (FTAs) and regional FTAs with ASEAN, sourcing much from the ASEAN region and has completely bypassed India's capabilities. China should change its strategy to source more from India where it is more competitive than other countries so that it can benefit itself by lowering its cost of imports from other ASEAN countries and also provide greater market access to India.

Q: You were telling me that India is trying to get China to accept ASEAN+6. At the moment China has preferred the group ASEAN+3 and India is not in that plus three, so they should get into ASEAN+6. Is China resisting it stubbornly or is it something which India can win over?

Chaturvedi: China's resistance for India's access to not only their own market but even to that of ASEAN is very much evident. We need to realise the agony that our pharmaceutical market is facing in terms of market access in China. So, that struggle is going on.

The issue here is that there is growth in India as they are saying; the only challenge that we have at the domestic level is to have consistency in terms of our production, production of quality and then be part of those value chains which are coming in. So, some proactive measures we require on part of our own industry and our government to see that we are part of those chains. As you know in the last couple of years and if you see the number you were right that China has invested very little right from 2000 to 2014, only something like USD 400 million but if you look at India's investment in China, it is somewhere close to USD 1 billion from 2000 to 2012. So, that very much shows that there is eagerness among Indian investor and Indian exporters to link up with Chinese market and take the measures that are important in terms of tap on these externalities which are evident from the Chinese.

Q: I agree but is there a resistance on the past of China, is China using this bypassing of India because of diplomatic reason. Is China deliberately keeping India out?

Chaturvedi: Yes, definitely because the way China is using non tariff barriers to block our export of agriculture products. If you speak to export promotion council, they would tell you how much resistance we are facing in export of agricultural products on names of sanitary and phytosanitary measures, technical barriers to trade. So, sanitary/phyto-sanitary (SPS) and technical barriers to trade (TBT) are the two agreements of WTO within which China is blocking our export of agricultural products.

You would also find resistance in terms of not allowing export of our pharmaceutical products to China. However, for the last five years, major India companies are requesting for clearance even when they have Food and Drug Administration (FDA) clearance to export to Untied States - China on questions or on pretext of standard, is not allowing our pharmaceutical exporters to land up in Beijing or Shanghai. So those are some of the measures and I was expecting that during this visit of the premier, the issue of mutual recognition of standards would come up and this is the way we have addressed our problems with USA, which was a sort of economy ridden with barriers.

Q: But it hasn't come up?

Chaturvedi: No, it hasn't come up at this point but I was hoping that something would be done to address this.

Q: Do you think that we need to get into the ASEAN first and then when your products are there, getting into China is easy?

Mohanty: At the outset I would like to tell that at the beginning there are two processes – ASEAN+3 and ASEAN+6 and China was insisting on ASEAN+3 because China was more consistent with countries like Japan, Korea and China. Therefore, China wanted that ASEAN+3 should start first but subsequently India and other countries strongly argued and several studies showed that there is tremendous potential in ASEAN+6, which is much better than ASEAN+3 and that is how the new grouping has come up in the name of Regional Comprehensive Economic Partnership (RCEP) and India is part of RCEP and now there is no ASEAN+3.

As you rightly said that several ideas have come up and we have seen in various studies that many of them are found to be very good particularly ASEAN could be India's future.

Q: Two issues – the renminbi has remain stable compared to the dollar and definitely compared to the rupee as well over the past four-five years since the Lehman crises and India has had the advantage of huge depreciation in the last one year. Is this going to be able to bridge the deficit?

Chaturvedi: I think much more substantive issue in context of India-China relationship is this huge trade deficit to which you alluded in the beginning and that trade deficit we would have to address. However, if you pick up details on China's strategy because China is facing hit all across the world because of trade deficit. Latin American countries immediate after Fortaleza meeting of BRIC when premier went across Latin America, every country they raised this issue of trade deficit with China.

So, there the issue that China is trying to raise is to take that advantage of trade deficit to turn it into preferential investment arrangement and after coming back from Ahmedabad the premier again indicated in terms of preferential investment access in India. Therefore, the USD 20 billion proposal that has come up for investment is a very little given the huge gap we have of USD 36 billion. So that's a major challenge that we are facing and you rightly said in the beginning that with Japan we have a deficit of only USD 6 billion. With China the measures to allow market access is an issue as I said in the beginning but then to turn deficit into preferential investment to get absorbed at the local level is a strategy which is a very brilliant masterstroke from China and we would have to understand this game and would have to take it in that earnestness.


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Improve Indian labour policy to attract investments: VIP

Dilip Piramal, chairman,  VIP Industries says India needs to attract investments and one way of doing that is by improving labour polices among other measures.

This is coming from an affected party as Piramal had pulled out his plant from India and set it up in China because of intractable labour laws in India.

Also Read: Diplomatic talks aside, China still bypasses Indian exports

"Indian unions are so strong that once the company is flourishing, they demand very high wages like say Rs 20,000 - 25,000 a month. At that wage level our manufacturing cost, the labour cost of that product goes up to about 15 to 20 percent. That's 10 percent higher than what we can get from China. The Chinese manufacturing wage bill is not even 5 percent. So, this 10 percent or 15 percent price differential is much more than what we can sustain," he explains.

Below is the edited transcript of the interview to CNBC-TV18.

Q: Since you pulled out investments from India and put them in China it is tough to expect why Chinese will invest USD 20 billion in India if their investment climate is so much better than ours, will they?

A: There is no connection between the two things or rather the two things are on opposite sides. If today we have Indian companies like ours importing, getting a lot of sales from the products made in China and importing them all the way to India, then what is the logic of Chinese companies investing in India.

However, it also depends on the type of products; I mean each industry is different so obviously the Chinese won't be investing in these low wage goods like luggage which I am importing but I guess they will invest more in the heavy industries like chemical industries and all which are better located in the country where they are sold. So, I really don't know where China will be investing in India. But let say so many areas like infrastructure particularly which have to be implemented in the country itself and cannot be easily like outsourced, you cannot outsource laying of railway tracks and all. So maybe they might be investing in such areas where they do have lot of expertise.

Q: What was the compelling reason that pulled you into China? Why did you invest there and what does India need to change?

A: I will give you the example of luggage itself and this can be sort of same example is there for readymade garments which is one of the largest industries in the world. What happens is that these are very low cost goods and where normally labour cost is about 10 percent of the cost of manufacturing these products.

What happens in India is that the unions are so strong that once the company is flourishing, they demand very high wages something like say Rs 20,000 - 25,000 a month. And at that wage level our manufacturing cost, the labour cost of that product goes up to about 15 to 20 percent. That's 10 percent higher than what we can get from China or rather the Chinese manufacturing wage bill is not even 5 percent. So, this 10 percent or 15 percent price differential is much more than what we can sustain.

Q: So what can we change to become a compelling investment destination for the Chinese?

A: We have to make India a better place to invest in and have an environment which is more conducive for manufacturing. What is required for that is a general infrastructure has to be good like land number one has to be available at good prices which itself has now become a big problem because government has increased the price of acquisition of land. Then you need a general infrastructure like power supply, good wage or good labour supply which we have, but if they change the wage labour policies then it will become even better. 


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Kotak Balance announces dividend

Kotak Balance announces dividend, the record date for dividend is September 25, 2014.

Kotak Mutual Fund has announced dividend under the dividend option & direct plan - dividend option of Kotak Balance, an open ended balanced scheme.  The record date for declaration of dividend is September 25, 2014.

The quantum of dividend on the face value of Rs 10 per unit will be Rs 0.50 per unit each.


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JPMorgan hackers accessed servers but stole no money

Written By Unknown on Sabtu, 13 September 2014 | 23.24

"We are confident we have closed any known access points and prevented any future access in the same way," the paper quoted JPMorgan spokeswoman Kristin Lemkau as saying.

Hackers accessed dozens of servers at JPMorgan Chase & Co in a cyberattack launched in June, though no money was taken, the New York Times reported on Friday, citing people familiar with the investigation into the case.

"We are confident we have closed any known access points and prevented any future access in the same way," the paper quoted JPMorgan spokeswoman Kristin Lemkau as saying.

She added that the bank had "not seen any unusual fraud activity" since the intrusion was discovered and said there was no evidence that they have taken any proprietary software or had a blueprint of the bank's network, according to the Times.

JPMorgan disclosed late last month that it had been the victim of a cyberattack and was working with US law enforcement authorities to determine its scope.

The Times said the attack began in June, was detected in July and that the bank last week briefed financial regulators on the extent of the damage.

The report said that hackers accessed information on about 1 million customer accounts. It cited one source as saying that hackers had not gained access to financial information or Social Security numbers, and may have only been able to review names, addresses and phone numbers.

Bank spokeswoman Trish Wexler told Reuters she could not elaborate on Lemkau's statements to the paper or otherwise comment on the report.


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Spectrum sharing, trading guidelines by year-end: Prasad

In July, telecom regulator Trai had recommended allowing sharing of all categories of radiowaves held by operators including those allocated at the old price of Rs 1,658 crore or assigned without auction, a move that could help companies significantly reduce cost of providing mobile services.

Telecom Minister Ravi Shankar Prasad today said the guidelines for telecom spectrum trading and sharing will be in place by the end of the year.

"Guidelines will be in place by end of year on spectrum trading and sharing," Prasad said at the press conference marking the first 100 days in the ministry.

In July, telecom regulator Trai had recommended allowing sharing of all categories of radiowaves held by operators including those allocated at the old price of Rs 1,658 crore or assigned without auction, a move that could help companies significantly reduce cost of providing mobile services.

Trai had suggested that all access spectrum in the bands of 800/900/1800/2100/2300/2500 MHz will be sharable provided that both licensees are have spectrum in the same band.

At present, telecom operators have been allocated radiowave frequencies in 800 MHz (CDMA); 900 MHz, 1800 MHz, 2100 MHz (GSM 2G/3G); 2300 MHz and 2500 MHz (4G) for wireless telecom services.

Operators are allowed to share passive infrastructure like mobile towers, which has helped them in reducing operational cost but not active infrastructure like spectrum.


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Real problem with UPA not just principal-agent relationship

R Jagannathan
Firstpost.com

Former Comptroller and Auditor General (CAG) Vinod Rai's recent interviews, given in the run-up to the release of his book (Not Just An Accountant: The Diary of the Nation's Conscience-Keeper), offers us a perfect example of how principal-agent issues play out in the political arena. Serious misalignments in the interests of the principal and the agent sometimes lead to perverse results - and often scams.

The real problem is UPA-1 and UPA-2 was not just the normal principal-agent problem, but a further vitiation of the basic principal-agent relationship with the addition of yet another agent – a second agent appointed by the first agent to do the principal's job. Manmohan Singh �did not do his job because he saw his job as serving the wrong principal ( Sonia Gandhi ), or two conflicted principals (Sonia and the people of India). A double-agent cannot serve either principal properly.

Principal-agent issues� are well understood in economics and the challenge is to try and align the interests of the two as much as possible – but it is never fully feasible. For example, in a joint stock company the shareholders are the principals and the professional management is their agent. Shareholder value is maximised when professional management – in return for salaries and other incentives - works to enhance profits and share values, but professional CEOs do not always see their interests as coterminous with that of their shareholders. They may manage to optimise their own earnings or burnish their career profiles rather than just chase shareholder interests. Hence the efforts to align them further with offers of stock options, bonuses, etc. But even with all this, principal and agent may not always see their interests fully aligning.

Back to the political arena. Vinod Rai clearly implies that former Prime Minister Manmohan Singh �did not do his duty to the nation when, despite knowing what was going on in the telecom ministry under� A Raja , he refused to step in and correct things. Rai told� Times Now�in an interview �that even though Raja kept the PM fully informed about what he was up to, the PM sat on his hands. Rai concludes: "The buck stops at the PM's desk in any parliamentary democracy. He is the CEO of the country. He can stop, or he can initiate, both. I have written in the book that he probably chose not to stop (Raja's 2G scam)."

In short, the agent of the people (the PM) did not act in the interests of the principal (the nation).

Asked why he blamed the PM for the scams by� The Indian Express ,�Rai elaborated:"For taking a distanced view of subjects like spectrum and coal allocation which is a matter which needs deliberation. Whether it was conduct of the Commonwealth Games or the coal allocation process,�it is important for a leader to speak out.�He should have guided the decision-making process in a certain direction but he did not.�He was completely overpowered by the compulsions of coalition politics." (Italics mine)

Rai was, of course, speaking in the constitutional sense of where the buck ought to stop (with the PM, of course), but the real issue to be highlighted is the principal-agent problem that is in very sharp focus.

At best of times, even a politician directly elected by the people to run the country (or a state or a panchayat) may not see his best interests as the same as that of his constituents. He may see his job as catering only to those who voted for him, or even use his office to help relatives and friends make money, obtain jobs or access things they are not entitled to.

But� Manmohan Singh �wasn't the agent of the people. He was an agent's agent – twice removed from the principal. His was not just a case of misalignment of principal-agent interests, but something doubly hazardous. His was a principal-agent-agent problem. In other words, the principal voted the Congress to power, but the Congress president, Sonia Gandhi , appointed yet another agent (Manmohan Singh) to do her job.

In other words, there was a double misalignment of a principal, its agent (Sonia), and her own agent (the PM).

Manmohan Singh clearly did not see himself as the direct agent of the people, but an agent of� Sonia Gandhi . In short, he saw his job as aligning his interests with that of�hisprincipal, who was really only the agent of the people.

That Manmohan Singh did not see himself as the direct agent of the people but that of Sonia is made clear by his former media advisor's book,�The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh, where� Singh confesses that he is not the final boss.� He is quoted as saying: "I have to come to terms with this. There cannot be two centres of power. That creates confusion. I have to accept that the party president is the centre of power."

Vinod Rai may be right to say that the buck stopped with the PM, but the former PM probably did not see it that way. He saw his job as doing the bidding – implicit of explicit – of his principal.

Scams can happen even if principal-agent interests are not seriously misaligned in a democracy, but when the agent appoints another agent, the second agent at the other end of the equation will see his job as not serving the real principal (the people), but the principal who appointed him.

This is the tragedy of Manmohan Singh – and India.

The writer is editor-in-chief, digital and publishing, Network18 Group


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Kyoorius Designyatra 2014: What's in it for marketers?

Storyboard visits the ninth edition of Kyoorius Designyatra 2014 which kicked off on September 11 with 1520 delegates from 18 countries including 370 marketers. We get you what you can expect from the festival and why it is a must for marketers.

Storyboard visits the ninth edition of Kyoorius Designyatra 2014 which kicked off on September 11 with 1520 delegates from 18 countries including 370 marketers. We get you what you can expect from the festival and why it is a must for marketers.


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NRI investment in Indian realty may rise 35%: Survey

Property developers are expecting a 35 percent surge in real estate enquiries from NRIs (non-resident Indians) with Bangalore turning out to be a favourite, according to a survey by the Associated Chambers of Commerce and Industry of India (Assocham).

To tap the growing interest, which comes at a time when the global economy is stabilising and India is showing strong signs of revival, real estate companies here are pulling out all the stops by conducting property shows, exhibitions and opening overseas representative offices.

Developers are also expanding their existing distribution chains and entering into strategic partnerships to encourage investors from this cash-rich segment, the industry body said.

The survey was conducted among nearly 850 real estate developers in Delhi-NCR, Chandigarh, Mumbai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Pune, Dehradun, Chennai etc.

Bangalore was the most favourite property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun, the survey showed.

Also read:  Mumbai realty prices see modest appreciation in Jan-March

The enquiries are primarily coming from NRIs residing in the UAE, the US, Singapore, Australia, the UK, Canada and South Africa.

This year, demand is more for the high-end property and commercial buildings, developers say.

"With the revival in global economy, especially in the United States and Europe, people are more optimistic and looking for property to invest in."

"Both small and big developers are focusing on the NRI base in the US, the UK and Asia Pacific region this year," Assocham Secretary General D S Rawat said.

As per the findings of the survey, Ahemdabad (32 percent) continued to be the most stable market in terms of demand and absorption of both residential and commercial spaces.

NRIs consider Ahmedabad as a safe place to invest in, with lenient government regulations for property investments. Pune was at the third position (30.5 percent), as per the survey, whereas Chennai (28 percent) was at the 4th spot and Goa (23 percent) at the 5th place.

In Delhi, there has been a 21 percent rise in enquiries this year as opposed to last year and a majority of them have been for the residential segment.

Catering to the growing demand in the high-end segment, Delhi has also emerged among the promising markets for real estate, the survey showed.


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Weak industry stubborn inflation hinder India's recovery

India's industrial output growth hit a four-month low in July while inflation remained high, underscoring the struggle of Asia's third-largest economy to make a sustained recovery from its longest stretch of sub-par growth in decades.

Output from mines, utilities and factories grew by a much slower-than-expected 0.5 percent year-on-year, government data showed on Friday, down from June's revised 3.9 percent rise.

Output growth hit a 19-month high of 5.0 percent in May.

Retail inflation, which the Reserve Bank of India (RBI) tracks for setting lending rates, edged down marginally to 7.8 percent in August from 7.96 percent a month earlier, helped by slower annual rises in prices of fuel and clothes.

The numbers come after the economy posted its fastest growth in 2-1/2 years in the quarter to June, helped by a revival in industry. Prime Minister Narendra Modi seized on that figure to highlight the "huge positive sentiment" behind India's recovery.

However, high inflation would make it tougher for Modi to encourage Indian consumers, who power nearly 60 percent of the economy, to loosen their purse strings. It would also make the RBI wary of lowering interest rates later this month.

The RBI, which wants to reduce retail inflation to 6 percent by 2016, left interest rates steady last month, citing inflationary risks from a late monsoon.

While better rainfall in recent weeks, falling global crude prices, moderating vegetable prices and a favourable statistical base will likely help lower inflation, rates are widely expected to remain on hold when the RBI reviews them on Sept. 30.

"The outlook on inflation seems less discomforting than it was a month back," says Upasna Bhardwaj, an economist at ING Vysya Bank, in Mumbai.

"We continue to expect that RBI will keep its policy rate unchanged through fiscal year 2014/15 (March 2015) with a probable action mid-next year."

The prospects of a revival in demand-driven price pressures following a pick-up in economic activity and sooner-than-expected interest rate increases in the U.S. are also expected to weigh on the central bank's rate decision.

Any decision by the U.S. Federal Reserve to raise rates, which have been held near zero since December 2008, will have implications for India, as it could lead to capital outflows, weakening the rupee and inflating costs of imported commodities.

Modi won India's strongest electoral mandate in 30 years in May, vowing to lift sliding economic growth, cool inflation and create enough jobs for its young workforce.

BULLISH INVESTORS, GLUM CONSUMERS

The optimism fanned by Modi's rise to power has already brought inflows of nearly $14 billion of foreign funds into Indian equities this year as investors bet that his drive to cut red tape will revive stalled projects and underpin the economic recovery.

The 50-share Nifty has gained over 30 percent in US dollar terms this year to become the best-performing equity index in Asia. Goldman Sachs upgraded its target for the index this week, citing optimism over future earnings of Indian firms.

To sustain this euphoria, economists say, Modi must overhaul India's strained public finances, stringent land acquisition laws, chaotic tax regime and rigid labour rules.

During his first 100 days in office, the new prime minister showed little appetite for such structural changes, and there is concern that sharply higher growth in the last quarter could reduce their urgency.

That could be damaging for an economy that is still hobbled by slack consumption and weak business investment. Persistently high inflation and years of stagnant growth have forced consumers to cut discretionary spending.

Consumer goods output, a proxy for consumer demand, has grown in just two of the last 19 months. It fell an annual 7.4 percent in July.

Firms are shying away from fresh investments. Capital goods production fell 3.8 percent from a year earlier.

"The pro-business government has facilitated the investment climate and boosted confidence, but more needs to be done to get back to a period of high growth and low inflation," said Rohini Malkani, an analyst at Citi.


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Brent crude near 2-yr low: Top oil stocks to buy and sell now

SLIDESHOW

Sat, Sep 13, 2014 at 16:50

| Source: Moneycontrol.com

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.


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Check out: Latest launches from Indian auto industry

Overdrive gets you the hottest launches in the auto world in 'Motoring News'.

Overdrive gets you the hottest launches in the auto world in 'Motoring News'.


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Will new BMW 7 series outrun 3 of its toughest rivals?

Overdrive's Jamshed Patel tests if the BMW 7 series outshines three of its toughest rivals – Jaguar XJ L, Audi A8 L and the Mercedes Benz S-class.

Overdrive's Jamshed Patel tests if the BMW 7 series outshines three of its toughest rivals – Jaguar XJ L, Audi A8 L and the Mercedes Benz S-class.


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Overdrive reviews KTM RC 390

Overdrive's Shubhabrata Marmar flew all the way to Modena, Itlay to take the first ride of the KTM RC 390. Here's his review on the bike.

Overdrive's Shubhabrata Marmar flew all the way to Modena, Itlay to take the first ride of the KTM RC 390. Here's his review on the bike.


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BSE to shift 74 stocks to restricted category from Sept 9

Written By Unknown on Sabtu, 06 September 2014 | 23.24

The stocks to be transferred to the trade-for-trade or the 'T' group segment include that of Panasonic Appliances India Company, Saregama India, Shriram Asset Management Company and JBM Auto.

Premier stock exchange BSE will shift securities of 74 companies to the restricted trading segment from September 9, to ensure safety of the investors.

The stocks to be transferred to the trade-for-trade or the 'T' group segment include that of Panasonic Appliances India Company , Saregama India ,  Shriram Asset Management Company and JBM Auto .

Under the trade-for-trade segment no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.

The move is "with a view to take preventive surveillance measure to ensure market safety and safeguard the interest of the investors," BSE said in a statement Friday.

"Trading Members are requested to take adequate precaution while trading in above scrips, as the settlement will be done on trade-to-trade basis and no netting off positions will be allowed," the exchange said.

According to BSE, "the transfer of scrips for trading and settlement on a trade-to-trade basis is purely on account of market surveillance measure and it should not be construed as an adverse action against the company".

"This is a temporary measure and will be reviewed periodically depending on the market conditions," it added.

Further, BSE said it would shift securities of 87 firms Emkay Global Financial Services out of the restricted segment with effect from September 9.

The bourse also said that securities of 252 companies, including  Ramco System and Bharatiya Global Infomedia , would continue in the trade-for-trade segment.


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UTI MF's focussed equity fund mops up more than Rs 770cr

UTI Mutual Fund today said its 'Focussed Equity Fund - Series I' closed with an overwhelming response and garnered more than Rs 770 crore.

UTI Mutual Fund today said its 'Focussed Equity Fund - Series I' closed with an overwhelming response and garnered more than Rs 770 crore.

"UTI's Focussed Equity Fund - Series I (1,100 days) received an overwhelming response from investors during the NFO period of August 13-27. The scheme has attracted more than 67,000 applications and garnered over Rs 770 crore," UTI MF said in a statement today.

UTI MF managing director Leo Puri said, "The excellent mobilisation is a reflection of the continued trust reposed by the investors in UTI's fund management capabilities".

UTI MF's Sales and Marketing President Suraj Kaeley said, "With this fund, we have set a new benchmark in close-ended equity funds. It also signals the revival of the interest of
retail investors in the equity market."

The Focused Equity Fund - Series I is a 1,100-day close-ended equity oriented scheme. The scheme would be invested in a compact portfolio of up to 30 securities.


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Trai suggests no extra entry fee for full MNP service

Trai suggests no extra entry fee for full Telecom regulator Trai has suggested that full mobile number portability service should attract no additional entry fee and bank guarantee from MNP operators.MNP service

Telecom regulator Trai has suggested that full mobile number portability service should attract no additional entry fee and bank guarantee from MNP operators.

The Department of Telecom (DoT) had sought Trai's opinion on issues like additional entry fee, bank guarantees and clarification on number of players to be involved in the rollout full MNP service in the country.

With regards to entry fee, Trai said whatever it had suggested in its earlier recommendations should be taken for record, sources said.

Trai had submitted its recommendations on full mobile number portability on September 25, 2013.

The government in June this year granted in-principle approval to full MNP that allows customers to retain numbers even after switching operator or location.

The Telecom Commission will now consider the recent clarifications from Trai and will take a final decision on the matter.

There are two MNP operators in India: Syniverse and MNP Interconnection Telecom Solutions India, which is a joint venture between US-based Telcordia Technologies and Indian enterprise DTC.

The government is trying to achieve full MNP by March 2015.

At present, subscribers are allowed to change their service providers while retaining same number within a circle only.


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Investor Camp: Will market's bull run continue?

Watch Investor Camp at Noida with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy where they discuss the road ahead for the market with market experts.

Watch Investor Camp at Noida with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy where they discuss the road ahead for the market with market experts.


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Forex reserves up by USD 60.5 million to USD 318.64 billion

Foreign currency assets (FCAs), a major constituent of overall reserves, increased by USD 75 million to USD 291.393 billion in the period.

The country's foreign exchange reserves surged by USD 60.5 million to USD 318.64 billion for the week ended August 29, as foreign currency assets rose, the Reserve Bank of India (RBI) said today. Last week, the reserves had fallen by USD 810.7 million to USD 318.579 billion, the RBI statement said.

Foreign currency assets (FCAs), a major constituent of overall reserves, increased by USD 75 million to USD 291.393 billion in the period, the statement said. FCAs, expressed in dollar terms, include the effect of appreciation or depreciation of the non-US currencies such as the euro, pound and yen held in reserves.

Gold reserves remained unchanged at USD 21.173 billion in the reporting week.
The special drawing rights were down USD 10.5 million to USD 4.386 billion, and India's reserve position with the IMF also dropped by USD 4 million to USD 1.687 billion during the week, RBI data showed.

Also Read: See near-term rupee stability; 62/$ by 2015-end, says HSBC


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Sesa Board nod for raising borrowing cap to Rs 80K cr

The Board has also approved creation of charge/mortgage over properties of the company for the purpose of the borrowing, Sesa Sterlite said.

Sesa Sterlite  Friday said its Board has approved an enabling resolution for raising its borrowing limit by over 33 percent to Rs 80,000 crore.

The Board, which met Friday, has also approved a proposal to issue convertible securities of up to Rs 6,000 crore besides giving nod for private placement of non-convertible debentures of up to Rs 4,000 crore, the metal and mining major said in a BSE filing.

"The Board in their meeting held today considered and recommended passing ... enabling resolutions for increase in the borrowing limits of the company from Rs 60,000 crore to Rs 80,000 crore," it said.

The Board has also approved creation of charge/mortgage over properties of the company for the purpose of the borrowing, Sesa Sterlite said.

The enabling resolutions, once approved by shareholders, would remain valid for one year from the date of getting their nod.

The company Board has also approved re-appointment of Dindayal Jalan as Whole-Time Director, designated as Chief Financial Officer, for two years till September 30, 2016.

Sesa Sterlite stock price

On August 22, 2014, Sesa Sterlite closed at Rs 281.05, up Rs 2.75, or 0.99 percent. The 52-week high of the share was Rs 318.40 and the 52-week low was Rs 168.30.


The company's trailing 12-month (TTM) EPS was at Rs 4.85 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 57.95. The latest book value of the company is Rs 113.60 per share. At current value, the price-to-book value of the company is 2.47.


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Wilful defaulter tag a powerful weapon for creditors: Rajan

"The wilful defaulter tag is a powerful weapon in the hands of creditors for resolving distressed assets. It shuts out access to credit within the Indian financial system for a borrower," Rajan said without naming Mallya.

Reserve Bank Governor Raghuram Rajan has said the wilful defaulter tag is a powerful weapon in the hands of banks for resolving bad loans. His comments come days after the state-run United Bank of India declared the industrialist Vijay Mallya as "wilful defaulter ".

"The wilful defaulter tag is a powerful weapon in the hands of creditors for resolving distressed assets. It shuts out access to credit within the Indian financial system for a borrower,"  Rajan said without naming Mallya. He was speaking at an event organised by American bank Citi at Boston. The comments come from a note circulated by the event organiser. Mallya, whose  Kingfisher Airlines owes money to several banks, had yesterday said he will challenge  UBI's decision to declare him a willful defaulter.

Mallya is the chairman of United Breweries, producer of India's best-selling beer brand Kingfisher. He is also the chairman of United Spirits, now controlled by Diageo Plc. Besides United Bank of India, Kingfisher owes about Rs 9,140 crore to about a dozen banks. Of them,  IDBI Bank is considering declaring Mallya a willful defaulter and is serving out its 15-day notice period on non-payment of dues. Kingfisher owes Rs 750 crore to IDBI Bank. 

Indian banks' gross NPAs touched 4.6 percent in June 2014, according to the rating agency Icra. Rajan said even though GNPAs and restructured assets are at 10 percent of the total assets, there are some signs of this stress easing in the last few quarters as project approvals have been fast-tracked and levels of stalled projects have started to decline.

"The sectors which have been impacted the most could see NPAs easing as growth returns," he was quoted as saying.


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USL board orders probe into loans to UB Group companies

"Certain pre-existing loans/deposits/advances due to the company and its wholly owned subsidiaries from United Breweries (Holdings) Ltd which were in existence as on March 31, 2013, has been taken into consider atom in the consolidated annual accounts of the company drawn up as of that date."

The Board of United Spirits Ltd , now controlled by Diageo, has ordered a probe into the loans given by United Spirits to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.

The company had reported net loss of Rs 105.03 crore in the fiscal ended March 31, 2013. USL made provisions of Rs 1,012.75 crore in year ended March 31, 2014 on the account of 'doubtful loans' and exceptional item of Rs 3,235.73 crore on sales of Scottish subsidiary, Whyte and Mackay.

While ordering the probe for a "detailed and expeditious enquiry on doubtful loans", the company said: "The Board has directed the Managing Director to engage independent advisors and specialists as required for the enquiry. "Certain pre-existing loans/deposits/advances due to the company and its wholly owned subsidiaries from United Breweries (Holdings) Ltd which were in existence as on March 31, 2013, has been taken into consider atom in the consolidated annual accounts of the company drawn up as of that date."

Pursuant to a previous resolution passed by the Board on October 11, 2012, such dues (together with interest) aggregating to Rs 1337.40 crore were consolidated into, and recorded as, an unsecured loan by way of an agreement between the company and UBHL," the company said. For the quarter ended March 31, 2014, the company reported standalone net sales of Rs 1,916.95 as against Rs 1,866.18 crore in the corresponding period a year ago. For the quarter ended March 31, 2014, USL's standalone net loss stood at Rs 5380.10 crore as against net profit of Rs 56.02 crore.

The probe comes after UB group chairman Vijay Mallya was declared a wilful defaulter by state-owned United Bank of India. However, Mallya disagreed with the action of the lender and said he would pursue legal action. "We were not given a hearing, we have not appeared before them, we disagree with their action and we shall pursue legal action," Mallya told reporters after the annual general meeting of United Breweries.

World's largest spirits maker Diageo Plc announced on November 9, 2012 that it will acquire 53.4 percent stake in United Spirits for Rs 11,166.5 crore in a multi-structured deal.
 

United Spirits stock price

On August 22, 2014, United Spirits closed at Rs 2279.05, down Rs 111.2, or 4.65 percent. The 52-week high of the share was Rs 2940.55 and the 52-week low was Rs 2226.00.


The latest book value of the company is Rs 89.71 per share. At current value, the price-to-book value of the company was 25.40.


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RBI to hold rates on Sept 30; may cut in Feb: BofA-ML

The Reserve Bank of India is likely to hold the key interest rate in its policy review meeting later this month and is expected to lower that from February, says a Bank of America Merrill Lynch report.

According to the global financial services major, the Consumer Price Index based inflation is peaking off and is expected to be around 7.5-8 percent in September.

"We expect the RBI to begin to cut rates starting February with stable oil prices and INR providing comfort that CPI inflation will come off to 6 percent by early 2016," BofA-ML said in a research note.

The Wholesale Price Index based inflation fell to 5-month low of 5.19 percent in July on account of decline in vegetable prices, while the CPI-based retail rose marginally to 7.96 percent in July, from 7.46 percent in June.

The BofA-ML report further noted that late rains should water a good winter rabi crop to douse agri-inflation.

Moreover rising investment is beginning to step up agriculture, especially horticulture production.

Secondly, 'imported' inflation is expected to abate with the US Fed's tapering holding global commodity prices in check and stabilisation of the rupee.

Indian diesel prices will get benchmarked to global prices by June and finally, weak aggregate demand will likely check pricing power.

On GDP, the report said that the growth rate is bottoming out. It is, however, expected to return to 7.5 percent not before 2018.

Soon after taking the reins of RBI in September last year, Rajan surprised the industry by hiking the short-term policy rate by 0.25 percent to keep inflation under check.

The repo rate or the short term lending rate was increased to 7.5 percent from 7.25 percent.

Subsequently, RBI raised repo rate by another 0.5 percent to keep inflation under check.

However, it has kept interest rate unchanged since April this year.

In the recent monetary policy review, RBI kept policy rate static at 8 percent citing upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices.


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Expenditure panel to look to boost capital spending: FinMin

The newly-constituted Expenditure Management Commission (EMC) appointed by the National Democratic Alliance government will look to review major areas of central government spending and suggest ways to improve fiscal discipline and create more space for spending development projects, the Finance Ministry has said.

The newly-constituted Expenditure Management Commission (EMC) appointed by the National Democratic Alliance government will look to review major areas of central government spending and suggest ways to improve fiscal discipline and create more space for spending development projects, the Finance Ministry has said.

The announcement of the EMC was made by Finance Minister Arun Jaitley during the July budget.

The EMC whose chairman (currently former RBI governor Bimal Jalan) will enjoy union-minister status, will also have a mandate to review the rules pertaining to the Fiscal Responsibility & Budget Management (FRBM) Act.

Also read: Bimal Jalan to head govt's panel on expenditure management

One the poll promises of the Bhartiya Janata Party, whose NDA coalition swept to power on a historic mandate this May, was to review government spending, which had increasingly tilted towards greater subsidies and more revenue expenditures in the past several years.

The Finance Ministry said it expects the EMC to get full support from state governments.


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